Alternative investments are increasingly favoured by South Africans according to the results of the first Jaltech Alternatives Investment Survey. The survey probed the views of 1300 participants including over 200 investment advisors to gain insights into alternative investment trends and the behaviour of individual investors and financial advisors.
According to Jonty Sacks, partner at Jaltech, “The popularity of these investments stems from various factors, including the desire for diversification, the potential for higher returns, and the opportunity to invest in financial assets that are not correlated with traditional markets. Consequently, 79% of investors plan to increase their allocation to alternatives.”
The results highlighted that among the different types of alternative investments, structured products, hedge funds, and cryptocurrencies have traditionally been the most popular choices for investors. However, looking ahead, alternative investments such as renewable energy, technology/AI, and cryptocurrencies are emerging as the asset classes that both individual investors and financial advisors are most interested in. These asset classes are perceived to have significant growth potential and are attracting considerable attention in the South African investment landscape.
The results from the survey illustrate that cryptocurrency (27%) is the most popular alternative investment amongst individual investors, followed by private equity (12%) and solar/renewable energy (11%).
Over the next 24 months, solar/renewable energy is the most sought-after alternative investment segment among investors, with 23% expressing interest in this asset class. This demand is unsurprising given South Africa’s current energy crisis. Technology/AI (14%) and cryptocurrency (13%) are also expected to be popular.
The survey findings suggest that alternative investments are gaining momentum in the South African market, as both individual investors and financial advisors are increasingly interested in and participating in this asset class. Further promoting the growth of alternatives in South Africa can be achieved by tackling obstacles related to information access and ensuring more financial advisors obtain the required licenses.
Other key findings include:
64% of individual investors invest in alternative investments.
65% of financial advisors offer alternative investments to their clients.
Most investors (69%) allocate 1-10% of their portfolio to alternative investments.
Financial advisors favour various alternative investments, including structured products, hedge funds, emerging markets, and private equity.
38% of investors invest in alternative investments with the expectation that they will generate high returns.
93% of financial advisors don’t consider the return profile of alternative investments as a persuasive factor and instead see value in the diversification alternatives offer, along with their lack of correlation to traditional investments.
Over 75% of both investors and financial advisors favour having exposure to both local and offshore alternative investments, as opposed to having 100% exposure to either local or offshore investments.
The survey findings suggest that alternative investments are gaining momentum in South Africa, as both investors and financial advisors are increasingly interested in and participating in this asset class. Further growth of alternative investments in South Africa can be achieved by tackling obstacles related to information access and ensuring more financial advisors obtain the required licenses.